Defining Low-wage Work

Identifying a metric to quantify what low-wage work consists of is challenging due to the complexity and variety of definitions used in the field. Comparing the most common measures found through a literature review, we chose to use the 150% Federal Poverty Level cutoff for a family of two for 2014. That measure equates to $11.34 per hour ($23,595 per year). [1]

The Federal Poverty Level is an annual standard updated by United States Department of Health and Human Services to determine eligibility for public programs. It is viewed as a standard metric in the economic field. [2][3] According to the latest national census data, the average household size is two people. The 150% level is a conservative yet standard cutoff found in the literature. [4]

No metric is 100% agreed-upon and we recognize the Federal Poverty Level does not capture the intensity, duration or correlates associated with poverty that may allow for more in depth understanding of low-wage work.[5][6] However, compared to other metrics, the Federal Poverty Level allows for more stable and easier comparability over time and across counties, revealing some the general trends of low-wage work in our state. Therefore, for all the statistics used in this report use the 150% of the Federal Poverty Rate cutoff, or $11.34 per hour.

OTHER MEASURES

Below are three other metrics we identified in the literature for quantifying low-wage work.

The number of workers earning the Minimum Wage (currently $7.25 per hour) is another measure that is used in literature regarding low-wage work, typically in the context of increasing the minimum wage as a policy strategy. However, selecting the minimum wage as a cutoff may understate the extent of low wage work due to the high number of jobs that would fall between the minimum wage and a living wage. In addition, a worker who earns the minimum wage and works full time would still remain below the poverty line.

Calculating wage Quartiles can also be used as a standard cutoff for low-wage jobs. For example, the bottom 25% of jobs in a wage distribution may be considered low-wage. However, this method guarantees that exactly 25% of all jobs will always be considered as low wage, regardless of the actual income levels. [7]

The Living Income Standard (LIS)is the most recent metric used to define low-wage jobs. It takes into account an average market basket of goods and services, such as food, housing and healthcare. Although the LIS provides a more comprehensive measure of the wages needed to afford typical household expenses, it does not allow for easy comparability across counties. It is relative only to the geographic area of interest.[8]